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HomeNewsEconomyU.S.-China Trade Deficit Narrowed Sharply in Q1 2019, Down $22.9B to $80.8B

U.S.-China Trade Deficit Narrowed Sharply in Q1 2019, Down $22.9B to $80.8B

U.S.-China trade and trade war concept illustrated by vector of two cargo ships. (Photo: AdobeStock)

Declining U.S. Trade Deficit With China, Other Countries-Areas, Boosting GDP

U.S.-China trade and trade war concept illustrated by vector of two cargo ships. (Photo: AdobeStock)
U.S.-China trade and trade war concept illustrated by vector of two cargo ships. (Photo: AdobeStock)

In the first quarter (Q1) of 2019, the politically-sensitive U.S.-China trade deficit for goods and services narrowed significantly by $22.9 billion to $80.8 billion. That’s the narrowest U.S. trade deficit with China since Q1 2017.

Exports from the U.S. to China rose by $4.9 billion to $41.4 billion, while imports declined $18.0 billion to $122.2 billion.


YearQ1Q2Q3Q4U.S.-China Trade Balance on Goods/Services (SAAR)
2017-79,862-84,282-83,402-89,658$-337,204
2018-92,188 -87,931-96,977-103,708$-380,804
2019-80,789$-80,789

The Commerce Department reported Thursday the U.S. trade deficit declined $1.1 billion to only $50.8 billion, meeting the consensus forecast. In April, exports were $206.8 billion, or $4.6 billion less than in March. Imports were down $5.7 billion to $257.6 billion.


IndicatorPriorPrior RevisedConsensus ForecastForecast RangeActual
Trade Balance (Q1 2019)$-50.0 B$51.9$-50.8 B$-52.7 B to $-50.1 B$50.8

A positive trade balance is referred to as a surplus, meaning the value of exports out of a country exceeds the value of imports into the country. A negative trade balance is referred to as a deficit, or colloquially, a gap. It means the values of imports exceeds the value of exports.

In May, President Donald Trump announced the U.S. hiked tariffs on China from 10% to 25%, a sharp increase worth more than $200 billion amid ongoing trade negotiations. The Chinese pulled back on a nearly-closed deal after Joe Biden entered the race for the 2020 Democratic nomination.

Beijing believes the former vice president will be less inclined to pursue more favorable trade deals for the U.S. China was holding out hope he’d run, and foreign leaders encouraged him to do so.

Fair traders such as the president argue a positive balance of trade or surplus is the more favorable economic state. It indicates a country enjoys a net inflow of capital from foreign markets into their domestic economy. Surpluses also reduces risk to currency manipulation by giving a nation control over the majority of its currency in the global economy.

Regardless, negative trade balances have a negative impact on gross domestic product (GDP).

The Bureau of Economic Analysis (BEA) second estimate for Q1 2019 gross domestic product (GDP) came in at 3.1%, beating the consensus forecast. While the advance estimate for Q1 2019 GDP was 3.2%, both readings have beaten their respective consensus forecasts.

The declining trade deficit represented slightly more than a entire percentage point in the advance and second GDP estimates for Q1 2019.

Meanwhile, Wall Street and the District of Columbia (D.C.) have largely opposed the president’s tariff strategy, despite a clear narrowing of the trade gap both over and between the two nations. U.S. markets initially reacted negatively to the announcement in late May, but are now rebounding.

On Monday, Dow Jones Industrial Average (^DJI) gained +512.40 points or +2.1% to 25332. On Thursday, following the report on international trade and goods, the Dow was trading in the green +47.68 (0.19%).

The S&P 500 (^SPX), which closed +58.82 or +2.2% and posted its second best day of gains for 2019 on Monday, is in the green +8.36 (0.30%). The NASDAQ Composite (^IXIC), which gained +194.10 points or +2.7% to 7527.12 on Monday, is the only major average in the red at −7.44 (0.098%).

In Shanghai, the SSE Composite Index (^SSE) closed overnight −33.62, or 1.17% to 2,827.80. It was trading at 2,939.21 prior to the latest round of tariffs.

Written by

Rich, the People's Pundit, is the Data Journalism Editor at PPD and Director of the PPD Election Projection Model. He is also the Director of Big Data Poll, and author of "Our Virtuous Republic: The Forgotten Clause in the American Social Contract."

Latest comments

  • Trump, Is Making America Great Again!
    I dont know why more dont see that he is. And these Trade Wars Trump put us in has been needed for Years..

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